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Taking Stock | Interview with Matt Robinson

In this week’s Taking Stock I talk to friend and serial entrepreneur Matt Robinson, co-founder at GoCardless and now running the proptech company Nested. We talk about the state of the UK real estate market during and after the COVID lockdown, and lessons he’s learnt from launching and running two VC-backed businesses – is it any easier the second time around?  

Follow Matt on LinkedIn or Twitter.

TRANSCRIPT OF INTERVIEW

Anil Stocker:

So hello everyone. And welcome back to my vodcast series, Taking Stock. I’m Anil Stoker, founded a FinTech called Market Finance back in 2011, and we deliver finance for ambitious business leaders across the country. One thing I love about my job is talking to entrepreneurs and people like my guest today on how they built their businesses, how they’re dealing with COVID and how they’re changing markets.

So I’m really looking forward to this episode, and I’m really happy to have Matt Robinson, who’s a friend, as well as a fellow FinTech entrepreneur. Here in London, he is well known for many different reasons. One being that he co-founded the company called GoCardless back at the start of FinTech, back in 2011, in the early days of FinTech and that business has scaled massively over the last seven, eight years. He is now a founder of another business called Nested, which is in the prop-tech space and regarding the property right now, I thought it would be interesting to catch up with him to talk about a property market under COVID and how he’s dealing with that. So, Matt, welcome to the show. It’s great to have you on.

Matt Robinson:

Hi. Thanks for having me, always nice to chat with you Anil, although we don’t normally have a camera recording everything.

Anil Stocker:

So you’re completely remote now, I see a wonderful garden behind you, so is the whole team remote?

Matt Robinson:

Yeah, 100% remote. We went really early, actually, I think three, maybe four weeks before lockdown, everyone thought I was conspiracy theorist at the beginning, I went out and told the team they couldn’t have a social, because this thing was coming and they all thought I was crazy. About a week later, everyone kind of caught on, although I can’t claim the credit, it was only because my EA was all over this, thankfully.

Anil Stocker:

Very smart, very smart, early mover. So, let’s talk about the housing market. I know there’s lots of people out there who own houses, who were thinking of selling, or there were people who were looking to buy. Myself. I was looking at buying a place at the end of last year and it didn’t work out. Then this year in the beginning of the year, I was like, “Definitely, my resolution is I’m going to buy a place for the first time.” Then COVID hit and the whole market kind of froze and I couldn’t view anything and I heard that banks weren’t giving mortgages. So I guess what’s happening right now? Is the market open or not, or what’s happened?

Matt Robinson:

Yes, the market is open, as of last Wednesday, howbeit, I think still sensibly, with the specter of the COVID pandemic overhanging, which is, you can do viewings and you can list your home for sale, the question is now the right time to do that? And therefore everyone who was already on the market generally remains on the market and people go and do viewings on those properties. But so far we’ve seen kind of, and it’s only been a week, but we’ve seen people starting to come through back listing onto the market, but it’s still a little bit slow. Our take as a company is we’ll support people with that, but we’re doing, the government has set out loads of guidance, which is generally sensible and we’re trying to do a load of stuff on top of that as well.

Anil Stocker:

So, did the market kind of completely stop, literally did like no one buy or sell houses during the lockdown?

Matt Robinson:

Not quite, but not far off. So it’s more of a practical moratorium than actually a complete outright ban. The guidance came that you shouldn’t sell or move house, unless you absolutely have to. As a combination of that guidance, plus the fact that there were a number of businesses who effectively their staff went into lockdown and they couldn’t operate remotely, meant that pretty much all transactions, unless they were right before the finishing line and there were serious will to get it done, didn’t happen. Because for instance, surveyors couldn’t go out and survey properties so mortgage companies couldn’t do evaluations.

Because removal companies, either furloughed their staff or have them working from home or they weren’t allowed to go out and meet people, et cetera, et cetera, those things are now coming back. So they’re starting and therefore, what we’ll see is a big spur of activity of the sales that were in place closing. And then I suspect a slower initiation of activity throughout the market.

Anil Stocker:

Okay. If you have a house and you want to sell it, is now a good time?

Matt Robinson:

Yeah. Challenging question as ever. I think, yes, actually, right this moment is good, in that, so we look a lot simple marketplace supply demand. And actually what we’re seeing right now is that demand level have gone up to basically similar level, across 2019, which wasn’t a brilliant, you’d remember that was a year where we had a thrice-delayed Brexit and the general election, however, there plummeted to zero during COVID. So there was a massive, call it a porous bounce, if you will. I don’t think that’s particularly accurate, but Q1 got a massive spike in demand. COVID, it went to zero and it’s already come back to where it was in 2019.

But what’s most interesting is that there’s like 30% of the stock on the market. So actually there’s not as many eyeballs in Q1, but there’s way fewer properties for them to be looking at. As a result, if you were a seller, limited supply, lots of demand, good price.

Anil Stocker:

Interesting. So there was almost like this bottled up demand during lockdown. Now everyone’s coming out and saying… Like me, example, myself, I really want to buy a place, I’ve come out and I’m looking and there’s very limited supply, so that means the prices will go up?

Matt Robinson:

It really depends. So I’d say everyone makes this mistake of thinking about the average property price and it’s just not accurate. There’s no such thing as the average property, even within London, every borough different and then within a borough, every postcode district, every sector is very different. So the way that I’d more think about it there are a lot of buyers out there, there’s not that many properties. If you have a property that’s in demand, then I don’t think its price is going anywhere. If you have a property where there’s not so much demand, it’s now been on the market for a number of months and there’s an opportunity to be opportunistic. What we’ve seen is therefore we’ve got plenty of viewings and inquiries and actually plenty of offers. Lots of offers are coming in with cheeky, low offers.

Where you’ve got a property that’s got five offers and they’re all trying to knock 10% off, it’s kind of obvious that you’re going to end up back where you started, where you’ve got a property that’s only got one offer because it’s a little bit less liquid market or there’s slightly less demand, that’s when the sellers lack of a choice. So far we’ve seen chips in some instances, but all buyers, it’s amazing how predictable people are in large numbers, all buyers have got the same idea, which is, “COVID, I can go and pay 10% less.” The offers they make are identical. As I said, if the property is in demand, it’ll get bidded up. So for me, the biggest piece of advice, you said, “Should I buy a property now or not?” I think there’s two bits to it.

One is property purchasing will always take longer than you expect, and therefore starting earlier rather than later, makes sense. Two, I think now is a good time to be opportunistic, and therefore, if you get out a little bit earlier than otherwise you would be, you don’t have to rush into anything. You can wait for the right property, with the right situation at the right price, where you can negotiate to come along. So I think it’s a really good time as a buyer to be out there looking for the right thing and actually it sounds crazy for me to say this or self serving, but right now is a good time as a seller. In a couple of months time when more suppliers come to market, I could easily see that actually prices stagnate or fall across the whole, or that within that picture, you have the super high demand stuff will still go for a good price. The stuff where it’s less liquid won’t.

Anil Stocker:

Okay. So, in summary, right now good time to sell. If you’re a buyer, you have to be a bit careful because you might not get that discount. You might not get that COVID discount.

Matt Robinson:

Yeah. I don’t love this view of property is an investment personally. I think it’s quite dangerous, they’re house to live in. It’s a place to have a lovely time, if ever there’s a moment to realize that, it’s right now, because we’re spending so much time there.

Anil Stocker:

That’s true.

Matt Robinson:

For me, it’s obviously, those that can buy are in fortunate position already, but I would really be thinking like, “Do you want to live there? Do you love it? Is it the right place for your family for the next 10 years?” As soon as you do that, like the macro economic picture becomes far more important than micro, what’s going to happen over the next year? I would worry less about all of those things. If you find the right property, it comes along and you can afford it, it’s time to buy.

Anil Stocker:

Yeah, that’s true. I was talking to an agent and apparently the demand for houses with gardens has gone through the roof because everyone’s like, “We can’t travel, so we’re got to enjoy the garden.”

Matt Robinson:

So I’m technically an agent, so you have to treat my statement with the same, but you were talking to an agent when he said that. I know there’s a joke someone said to me a long time ago, which is, “How do you know an estate agent’s lying? Because his lips are moving.” It’s not true. There are fantastic agents out there, but also they’re very much paid to talk that book, right? The agent who’s not telling a buyer that there’s loads of demand, it’s going to be really quick, price is going really well. Or he’s not telling the seller, “Hey, we’ve got loads of buyers on our book. Now’s a really, really good time to sell.” Is talking against their own interests.

Anil Stocker:

Yeah. That’s true. That’s true. Maybe I was naively really listening to him. So talking about all this data, you started this company, is that how you’re so close to the pulse and tell us what Nested, your business does then?

Matt Robinson:

Sweet. Well, there’s one thing I should say. Because I think your point there, of the garden and stuff is there is like, that’s definitely in there somewhere, it’s true. I’m not sure that that means that properties with a garden are going to see massive price appreciation. So there’s an element of truth. The bigger trend we’ve seen, it’s actually, people they talk with a big move of moving outside of London. We seem to see lots of people talking about bringing that forward. So people who were planning on doing it next year or the year after are now saying, “Actually, we think now’s the time.” And that might be moving from central postcodes to Lamberth or from Lambeth to Bromley or from Bromley out of London. But that’s definitely a trend we’re seeing and hearing a lot of from people.

Anil Stocker:

Yeah. There’s an interesting interaction there between, the working from home, people not going to go back to the office in the same way that they did before and that realization that they can maybe buy a house in the countryside for a much bigger space, because they’re going to be working at home three days a week and only going to be London two days a week. That must be playing a bit of a role.

Matt Robinson:

Yeah, big time. Absolutely, that’s driving it. I think also that just like what you want and expect from a home changes slightly. So to say that definitely does that, there was at least a grain of truth in what the agent is telling you there, but I think it was quite interesting when you think about it that way, is there is potential for an impact on the markets, of London and outside London being a little bit different or Central London to the suburbs being different, where I think we’re going to see less demand or more demand the further out from the center you get and the supply stays the same, which it likely will, I see no reason why it should change. That tells you that you’d expect prices to be more robust the further out of the center you get.

I could definitely see, you take commuter towns, the best property stock in the best community towns, I could see those prices holding up really robustly if not being pushed up. Because there’s only a limited amount of supply and I think demand will increase and when you’ve got an illiquid market, suddenly with lots of demand, you see price increases. So that’s an interesting sub trend that I suspect will come about.

Anil Stocker:

Interesting, interesting. And mortgages, the banks are lending again?

Matt Robinson:

Yeah, most of the mortgages were available in some form or another, for most of this period, the bigger problem was when people couldn’t do valuations, that was the practical thing that really stopped stuff. The market definitely reduced in terms of what was available, but you could still get stuff. We’ve seen people come back. So I’ve heard of Rezi people come back at 90% LTV, which is what you’d hope to see. Normally what happens is the number of available mortgages reduces, the cost increases and the LTV reduces, but getting back to 90 so quickly suggests that there’s a fair amount of confidence there. I think, let’s see if that sustains, but that’s largely an ability for them to shift from doing desktop valuations to actually be able to get surveyors back out in the properties.

Anil Stocker:

The Bank of England lowered interest rates, does that mean that mortgages are becoming even cheaper? I mean they were already cheap, but are you going to see mortgages at like 0.5%?

Matt Robinson:

I would doubt it personally. I think we are in the most benign interest rate environment ever. You generally see an asymmetric behaviour with response to interest rates. When they take them down, they pass on little or none of the change, when they put them up, they bung it on, plus some. So I’m not expecting them to get much lower.

Anil Stocker:

So they’re going to stay at the 1.5% rate?

Matt Robinson:

Hey, look, I’m not an expert on this stuff, but I don’t see them getting any lower. If anything, I’d be more worried about them increasing over time. I mean, there’s some really interesting, like the macroeconomic backdrop here is crazy, with the amount of money that’s… it’s not technically what it describes, but the amount of money that’s being printed, it’s going to have impacts on the economy that have to have knock on effects somewhere, whether that’s in how we respond using interest rates and fiscal policy, or whether that’s in inflation or elsewhere. It’s got to have a knock on effect somewhere.

Anil Stocker:

Yeah, yeah. Yeah. Okay. Well, let’s take it to your company then, Nested. Tell us about what you guys are doing and why do people use you? What problem are you trying to solve?

Matt Robinson:

Of course. So look, I think clearly we’re in the property space. And I think for me, the best business is always get started from a personal pain. I happened to be buying a house and when I did, there were a couple of problems I came across. One was that the industry just was so stuck in its ways and the experience was really poor. I spoke to various other people who bought and sold and it’s very rare that you hear someone say, “You know what? That was a great experience.” It’s really slow. It’s really long. You deal with people that you don’t hugely trust. There’s no real data behind it, despite it being one of the biggest financial transactions of your life and the fees being pretty monstrous. I just looked at that and felt like, “You know what? This is a space completely untouched by technology, where, as in many of the best spaces, if you can put together great people with great technology and a really strong offering, you can do something better.”

So at one part of our businesses, we just felt agency was stale and could be done a lot better. So we’re working on that and I’ll give you a ton of detail on how in a second. And then the second specific problem I saw was that there’s problem with chains, which is, when you’re buying a house, you also need to sell yours. Therefore, this person up here who’s selling the house to you, is also reliant on the person behind you and behind you or behind you. Really it came down to that point of the industry just had an innovated in ages and we saw loads of problems and we just thought, “You know what, if we built an agent today, it would not look like anything like the agents of today.” And there were these agents out there with these massive billboards that say like, “In operation since 1860 or 1910.” That’s not a badge of honour guys? Because you’re literally operating the same way as when you launched. Whereas for us, we look at it… Here’s some examples of what we’re trying to do differently.

One, when you’re selling, the majority of people are also buying and it feels crazy to me that agents would go to us and say, “Hey, it’s really important that you have an agent to sell your house. It’s such an important transaction. So important you have someone on your side. It’s the biggest transaction you make.” Well, often you’re upsizing. You’re making a bigger transaction in the house you’re buying and you don’t have anyone advising you there. The people that do, it’s often their parents haven’t bought a house for 20 years. It just felt crazy to me that agents are leaving you unsupported there. So one of the things we did is we call ourselves a double agent. We’ll help you sell your house for the best price. We’ll also help you buy your next one and we see that-

Anil Stocker:

That’s true, I’m looking for a place and I’m doing it on my own and I have to learn everything from scratch.

Matt Robinson:

You’ll pay probably three to 5% more than you would if you were using my buying agent.

Anil Stocker:

Yes. So then you would charge me for that?

Matt Robinson:

Yeah, we just charge you a service for something, we charge you, because we’re more efficient than other people, we don’t need to charge extra fees. We charge you the same fee as a high street agent, but we’ll charge that across selling your house and also advising on your onward.

Anil Stocker:

Okay. Double in one.

Matt Robinson:

Precisely. And we built a lot of cool technology behind that. So you can use our service, our tools to value the properties you’re looking at, to see local competition of your property. You can see with Nested every day, we’ll tell you what is the probability of getting an offer in the next 30 days, which helps you really understand, what’s going on and get real insight on your home sell. So that’s one part of it.

The second part was, seeing this chain problem, we thought, “Okay, well, how can we fix that?” We came up with the advance, where we effectively, we can again, value properties really accurately. So we say, “Look, we can give you the money that your house would sell for before it sells. You can go and buy the next one.” Then you pay us back when that one sells.

Anil Stocker:

Okay. That’s interesting. I just want to drill into that so we’re crystal clear. So I have a house, I want to buy a new one, but to buy the new one, I’ve got to sell my old one, you come and you offer me a price for my old house, so I can get that cash and buy the new one, is that how it works?

Matt Robinson:

Yep. There’s one detail which is slightly different, but works out the same, which is, we unsurprisingly can’t give you 100% of that on day one, because it’s impossible to be perfect on these things. So we typically give something lik 95% and then when it sells, we give you the extra 5% later.

Anil Stocker:

Okay. Okay. So there’s like, yeah-

Matt Robinson:

It’s the equivalent of getting a pre-approved 95% mortgage on any new house to go and buy. Then obviously the mortgage ends or is paid down when we sell your old house. So it’s effectively like a consumer friendly bridging loan, but if you went and got a bridging loan elsewhere, you pay far more, you’d get 60 or 70% LTV and a variety of less attractive terms.

Anil Stocker:

How many customers have you helped this with, since you’ve launched?

Matt Robinson:

Oh man, that’s a really good question, I should definitely know the answer to.

Anil Stocker:

How you measure success? Is it like total value or number of customers or total value of mortgages or of transactions?

Matt Robinson:

So there’s a few things, so look, so we look at NPS really hard, as I’m sure you’re doing your business. Obviously we look at run rate of what we’re generating. On the loan book we’ve gone away from thinking, “The bigger the book, the better,” because we’re just in a backdrop of COVID pandemic, prior to that, thrice delay Brexit, and also general election for which we’ve been managing our risk position to a certain place.

So I think we’ve done a few hundred million of advances against properties now. It’s something we’ll be looking to turn that product back on, through COVID and surprisingly we temporary put a pause on offering those loans, because the real concern for us is we don’t want to give those to people in a market where we don’t know how long it’s going to take for the property to sell, because then the customer does not know how much interest they’re going to have to pay.

Anil Stocker:

Exactly.

Matt Robinson:

Then in terms of the agency side of the business, we’re somewhere between half a percent and 1% of London market share and that’s the metric that we really look at, albeit we’re going to change that in the coming months because we really want to come back and say, “Okay, we built this. We’ve got service. We’re really happy with, we’ve got a great MPS. We’re getting loads of referrals, but we want to go and take local areas and own them.” So I want to go, as opposed to having 1% across the whole of London has been my next target, I want it to be, right, I want to go and take these five postcodes and have 20 to 30% market share in those, and 40, 50%, et cetera, et cetera.

Anil Stocker:

So already, I mean, and you’ve been around for how many… a few years is that right?

Matt Robinson:

I think it’s something like three years now.

Anil Stocker:

Okay. Okay. So you’re getting a, getting a nice foothold in the market it seems already, early quite quickly.

Matt Robinson:

Yeah, we’ve done okay. I think as I say, the next bit, to really get to the next level, I think you have to go and own local. If you think about what people care about, when they’re getting an agent, they care about fees because important time you need the right amount of money to make your move add up. We think we stack up really well there because our fees at the same as going to high street competitors and we’ll on average save… It’s crazy, we’ll save people tens of thousand pounds on their onward, we should really shout about that better than we do. We’re not as good at marketing ourselves as we should be actually. Then they care about the quality of the service. So who’s the person I meet and what’s the service behind them and what are the things that they’re going to do. We’re great on that. So we win because of that.

I think the third thing they care about and somewhat rightfully is local credibility. “Do you know my area? Do you have local market share? Do you have buyers on your book?” All of these things are little bit fallacious because the reality is that most buyers find a property in Rightmove and Zoopla, but they still carry weight in a customer’s mind because it’s such an important transaction. You don’t want to give it to someone who you don’t necessarily know, or haven’t done this before. You look for the safe pair of hands. So we think there’s a really big step change if we go into these areas, own a big market share where we think it will, size begets size.

Anil Stocker:

Yeah. Yeah. So you list stuff on Zoopla, Rightmove as well? You’re like an agent on those platforms?

Matt Robinson:

Yeah. Precisely. I mean, those are the portals, they have huge customer awareness and there is some agency don’t actually list properties on there and I think it’s absolutely insane. They try to tell their customers that they’re not costing them money, but they really, really are, because, well, hey, you’re looking for property right now, where are you looking?

Anil Stocker:

Yeah, basically Rightmove do this all the time. They have a lot of power in the market, don’t they, because everyone traffics there.

Matt Robinson:

Yeah. Precisely.

Anil Stocker:

Yes. What’s the team? How big is the team? Are you very tech heavy or you also have people going and visiting people in houses or at least doing video conferences with them?

Matt Robinson:

Yeah. Right now. So we’ve got to do both. I think it’s a good business, as you said earlier. It’s my second big one. GoCardless was the first, this one is a hard one, but a really satisfying one to crack, but it’s difficult because it comprises… You’ve got to be great at technology to build a really good service there, but you’ve also got to be great at operations because people matter in this business. You’re sending people out that meet both buyers and sellers and they have to do well. A lot of that is the technology build to equip them. We think about the tools we give our agents, giving them super powers. So as opposed to having to rely on an agent to learn every single thing and know every single thing, we’ve just built them a little iPad app they take around with them, which has all the FAQ, et cetera.

The third thing you’ve got to be great at, is for the debt business, you’ve got to be able to manage risk, because that’s a challenge as you know, as well as I do. Fourth, you’ve got to be great at capital markets, raising lots of cash to fund that. So actually it’s a really hard business, because you’ve got to do all four of those things and that means you need a really varied team with a broad set of skills. So we have, I think it’s like 35, 40, maybe 40% engineers at the minute. I think that will come down a little bit over the course of the next 12 months to 30%, but it’s clearly a core part of what we do.

Anil Stocker:

Yeah, no, look, sounds like there is a lot of complexity. I mean, buying and selling houses sounds easy, but behind it lies a lot of complexity, I can empathize with that, our business is very similar. You think giving money to small businesses is easy, but there’s a lot of things that you have to think about. This is your second business, as I mentioned up top, does it get easier? Is it easier the second time round? What have you learned on that front being a serial entrepreneur?

Matt Robinson:

Oh man. Good question. Look, some things are definitely easier. Like I’d say all the supporting stuff is easier, so fundraising, because you’ve got credibility and all the administrative bits, you just know, you’ve got lawyers already, you know how to like set up your accounts and do a PNL and all of that stuff. So that stuff definitely gets easier. But the hardest thing with any business to crack is always the people. That’s the team you build and the customers. Those things, yeah, there’s a load of things you can improve on, I didn’t know how to manage people then. And in fact was a really, really bad manager, now I’m a marginally less bad manager. So you know how to hire and you know the process side of it. But I think there’s still like actually at the heart of the thing, which is arguably harder, second time round, because when you’ve done it once already, you got to get back in the arena and really want to go and do it. And building a team from scratches is tough, every small business or big business owner out there knows that.

The same with customers, 10 years later, are still wanting to go out and speak to a customer or meet a customer and start again from scratch, it’s harder… because I think at the time, it’s dangerous, you can lose your humility and get arrogant and thinking, “Oh, I don’t need to be doing this anymore. I can just run the show from here.” It’s completely wrong. The day that you forget your staff and you forget your customers, and you get too far away from them, you screw up. So you get all the benefits of second time round, practically it’s easier. But I think some of the natural things that are easier the first time around become a little bit harder the second time around.

Anil Stocker:

That’s interesting. That’s interesting. Talk to me about what lies ahead, are you going to start lots of businesses? Are you going to try and really scale this one up to become big one? What’s your thoughts on the future?

Matt Robinson:

Lots of big ones.

Anil Stocker:

Lots of big ones.

Matt Robinson:

My view has been for a while now, I’d like to do one per decade. So GoCardless is my 20s, we brought a big one there, although that one’s still got a couple… still got a few more years, but that’s been huge and really good company that we’ve built there. Nested is the 30s, so I’ve got a long time to go yet, even if my wrinkles and hairline deny that. Then I’ve got plenty more decades to go.

I’ve got this thing, I want to do one per decade and over time, I think it becomes more and more important that you work with people who are younger than you. Because I think, again, it’s the same with these teams. It gets easier as you get more experienced and you leverage that, but I think it’s easy to get detached from what’s really going on in the world and the new technology, or even new consumer preference, et cetera.

Anil Stocker:

Absolutely. Absolutely. Do you think people should be starting businesses now, do you think this is a good time to start a business?

Matt Robinson:

Well, I think it’s a great time. I mean, to be honest, you’re starting a business you’re completely detached from… It depends on the type, but largely, you’re detached from the economy. It’s one of the safest bets. So for example, I think angel investing is in a way, like one of the safest asset classes to put your money into right now, because these companies operate on a different cadence to the rest of the economy, they’re away. They’ve got runway for the next 18 to 24 months. They’re there building product and when the markets reopen, it’s irrelevant to them to some degree.

Anil Stocker:

Yeah. A lot of people are saying that businesses born today are going to have to operate in quite a hostile starting environment, which makes them quite tough and lean. If you’re built in this mindset of, “We can’t have any frivolous spend and we’ve got to watch everything,” that’s actually quite good DNA for a company.

Matt Robinson:

Oh, a 100%. I mean, there’s, there’s a massive change that’s been happening. You would have felt this as much as me over the past couple of years where we’ve got this shift from like, everyone may obsessed with unicorns and growth at all costs, et cetera, et cetera. We’ve seen this shift first with Uber and the ousting of Travis, then with WeWork and Adam Newman and in fact, the whole like SoftBank entail, where we’ve had, you’re around, same as I was with RRP good times, part one from Sequoia. We’ve had the second deck, it’s been coming for a while and it sensible. I think we’ll continue oscillating between the two, but they’re definitely needs to be moving back in that direction. If I asked someone to list the top 10 new companies out of London over the past decade, or the top 10 new companies out of San Francisco in the last decade, at least 50% of them are probably going to go bust.

Anil Stocker:

Yeah, yeah.

Matt Robinson:

I’m not going to stand here and name names, but you’re building models on non-existent unit economics. I think of at least one business that Hiroki and I almost started before GoCardless. We didn’t do it because we just couldn’t figure out how to make the unit economics work. The thing’s massive today, but it’s like, I still don’t know how they’re going to make the unit economics work. Those businesses have survived for a long, long time on VC dollars. It’s not clear how much longer that’s going to be possible. So I think it’s really good.

Then another way of looking at this, it’s been really beneficial to Nested, is we’ve been writing these advances or loans against properties effectively. We try and give a higher LTV than anyone else out there in the market upfront and we will give you the rest later. But doing that over the past few years has been challenging, but I think that’s been really good for us.

As an entrepreneur, I think when you’ve got a non-risk business, you just have this… The right way to think about it is just, “How can we delight our customers?” That’s all I need to think about all day long. As soon as you go into a risk business, you have to have a second mind frame, which is, “How do I prevent my customers from screwing me?” That becomes really, really hard, because trying to delight people and stop them from screwing you the same time, is really quite challenging. I think I would have run off a cliff, delighting people. Then if this COVID thing had hit and we’d have three years of fantastic market growth and everything great, I think we would’ve hit COVID and we would have been in real trouble.

Whereas we’ve come off the back of all of the tremors from Brexit, election, et cetera. Each of those times you’ve had to look at this hard and say, “Okay, well, we’re really worried about this. So we’re going to have to pull this back and we’re really worried about this, we’re going to have to pull this back.” There’s not things I want to do, because I just want to be delighting customers, but you learn over time that the things you have to do and ultimately allowing your customers to screw you just doesn’t delight anybody.

Anil Stocker:

Yeah. Again, it’s basically giving you that discipline that you might’ve not clearly have had, had it been a really benign market where everything was rising seamlessly, which we’ve had decades like that, or we’ve got close to decades like that.

Matt Robinson:

It’s cliche, but tough times breed tough companies.

Anil Stocker:

Yeah, absolutely, good, so just to wrap up and taking stock of everything you’ve done. If you were going to give some advice to your young self, when you set out, I know you set out very young start companies, what would that be?

Matt Robinson:

Oh, I’m really struggling to answer that, because you distracted me with your peaceful use of Taking Stock as the selling outline. Well, what is my advice… Do you know what, the problem is? You know this as well as I do, I wouldn’t have listened, right? The challenge I have is, so many of these mistakes you just have to make. The biggest thing we got right when we started GoCardless, which we started young because it only gets harder. We had no responsibilities, no mortgage, no family, none of these things and therefore we can take a risk and go and make it happen. Also like, the further into your career, you get the bigger the paycheck you walk away from, all that stuff. That’s like the thing we really got right and I definitely, definitely wouldn’t change.

In terms of doing stuff differently, we got this book when we started GoCardless, we went to this thing called YC, Y Combinator, really famous now, and this great entrepreneur told us like, “Hey, here’s this book, you read this book and it will tell you everything about running a company.”

It’s the Steve Blank, Start-up Owner’s Manual and it’s like this massive tome. It sat on Hurocs’ desk for like six months, probably 18 months. And we never read it, never opened it because we’re too busy building a company. And when I finally set back to the board and stepped back from day to day at GoCardless, to just become a board member, I had some more time before I started Nested, it was like, “Right, I want to catch up on my reading.” I went and read this book and it was right. Everything in there was all we got wrong in GoCardless and it’s everything we needed to do. However, the only reason I knew that that was the stuff that we needed to do, is because I’d just gone through and screwed up.

Again, we read this Eric Reese book, The Lean Startup, and then 12 months later we realized, we weren’t the lean startup and this is what it actually meant. I there’s this degree of actually having to learn the hard way. I think that the other thing we got right is we generally try not to make the same mistake twice. So I think there’s a learning. In fact, I’ve got one more, there’s one thing that I definitely am not… Everyone, I think struggles with this and this is the one thing I pushed myself on, which is taking more time to, steal your phrase, to take stock. If you want to run a company, if you want to be a CEO, you have to be strategic.

And it’s too easy to get sucked into the weeds of the day to day. Something we’re really doing right now is taking this opportunity to take a step back and say, be really clear-eyed, “What are the bits we love about our business? What are the best we don’t like about our business? Which of those things can we change? Which can we not change?” When we come back post-COVID, let’s make sure the business looks exactly how we want it to look because it’s too easy to let things go in a particular direction, even if you don’t want them to.

So that’s the big thing for me, if I could back to GoCardless, I’m a good executer, I’m a really good executer, but it’s too easy to get into operational mode and just make stuff happen. There’s this phrase I heard a while ago, which is like, “With the right strategy, execution is easy.” So sometimes when it’s feeling really tough and you’re working really hard and you think, “Yeah, I’m really nailing it. I’m operating super hard.” You’ve got take a step back and say, “Okay, well maybe I’m getting something wrong on the strategy.”

Anil Stocker:

Very good. Very good, Matt. I know you’re busy and I know you’ve got to jump to another call right now. So thanks for taking time with us. I look forward to speaking more.

Matt Robinson:

Thanks, it was a pleasure, catch you later.

Anil Stocker:

Bye, bye.

Anil Stocker View All

Co-Founder of MarketFinance

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